Rohlig (UK) Ltd v Rock Unique Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Aikens,Lord Justice Sedley |
| Judgment Date | 20 January 2011 |
| Neutral Citation | [2011] EWCA Civ 18 |
| Date | 20 January 2011 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2009/1840 |
[2011] EWCA Civ 18
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LONDON MERCANTILE COURT
His Honour Judge Mackie Q.C.
Before: Lord Justice Sedley
Lord Justice Moore-Bick
and
Lord Justice Aikens
Case No: A3/2009/1840
2009 Folio 52
Mr. George Bompas Q.C. and Mr. Alexander Cook (instructed by Stewarts Law) for the appellant
Mr. Paul Toms (instructed by Pysdens Solicitors) for the respondent
Hearing dates: 22 nd November 2010
Lord Justice Moore-Bick:
This is an appeal against the order of His Honour Judge Mackie Q.C. granting the respondent, Röhlig (UK) Ltd, ("Röhlig"), summary judgment for £100,000 against the appellant, Rock Unique Ltd ("Rock") on its claim for £134,617.96 and directing that Rock pay the sum of £24,617.96 into court as a condition of being allowed to defend the balance of the claim on the grounds that the relationship between the parties was one of principal and agent.
Rock runs a garden centre which supplies, among other things, sandstone paving imported from India which is bought from the suppliers, Galaxy Impex ("Galaxy"), on f.o.b. terms. The quarry from which the stone is obtained lies in Jaipur some distance from the coast and arrangements must therefore be made for the stone to be loaded into containers, carried to a convenient port, shipped by sea to a United Kingdom port and transported by lorry to Rock's premises. Röhlig carries on business as a freight forwarder and was engaged by Rock to arrange the carriage of the stone from the port of loading in India to its destination in this country. The two companies began doing business together in 2002 and apart from a short interlude between 2004 and 2005 continued to do so until about November 2008 when the present dispute erupted. Röhlig started these proceedings in January 2009 seeking to recover charges in respect of the carriage and importation of various parcels of stone between April and December 2008.
On 2 nd March 2009 Rock served a defence and counterclaim in which it alleged that Röhlig had provided it with freight forwarding services pursuant to a contract entered into between the parties orally in June 2005 under which Röhlig agreed to act as its agent to arrange the carriage of the goods from India to the United Kingdom, but on terms that Röhlig would be solely liable on the contracts it made with third parties for that purpose. Rock also alleged that it was agreed that Röhlig would be entitled to recover in respect of the ocean carriage only such amounts as it paid to the carrier. It said that in breach of contract and of its fiduciary duty as agent Röhlig had overcharged it in respect of the expenses of ocean carriage and other transport charges. Accordingly, Rock said that it was not liable to pay the whole of the amounts shown in the invoices on which the claim was based and, moreover, that it was entitled to recover the amounts by which it had been overcharged in the past. They are currently estimated at between £300,000 and £400,000.
Röhlig contended that the contract incorporated the standard trading conditions of the British International Freight Association ("BIFA"), which provided, so far as is material for present purposes, as follows:
"21(A) The Customer shall pay to the Company in cash, or as otherwise agreed, all sums when due, immediately and without reduction or deferment on account of any claim, counterclaim or set-off.
…
27(B) … the Company shall in any event be discharged of all liability whatsoever and howsoever arising in respect of any service provided for the Customer … unless suit be brought and written notice thereof given to the Company within nine months from the date of the event or occurrence alleged to give rise to a cause of action against the Company."
Röhlig denied that it had agreed to act as Rock's agent. It relied on the fact that it had provided a written quotation of charges for the various services it was willing to provide and maintained that the two of them had contracted as principals. It was therefore entitled to charge the rates set out in its quotation, as varied by agreement from time to time, for the various services it performed regardless of the terms it agreed with third parties, such as the ocean carriers. It also relied on the two clauses in the BIFA conditions to which I have referred and argued that clause 21(A) prevented Rock from setting off against its liability under the invoices to which the proceedings related any claims it might have in respect of earlier charges, which were in any event barred by clause 27(B). In response Rock sought to rely on the Unfair Contract Terms Act 1977, arguing that both clauses were unreasonable and therefore unenforceable.
That was the shape of the dispute when the matter came before the judge on Röhlig's application for summary judgment. The judge thought it unlikely that Rock would establish its case on agency, but he did not feel able to decide the matter summarily. He did hold, however, that the claim was bound to succeed insofar as it would do so if the relationship were one of agency. Next, as I have already mentioned, he held that the contract incorporated the BIFA conditions. He held that clause 21(A) meant what it said and that it prevented Rock from setting up cross-claims in answer to Röhlig's claim. He also found that it satisfied the requirement of reasonableness. He then held that clause 27(B) was wide enough to discharge any liability in restitution in respect of any previous overcharging and found that it also satisfied the requirement of reasonableness. In the light of those conclusions he made the order to which I referred earlier, having found that, even if Rock were to persuade the court that its relationship with Röhlig was one of agency, a sum of £100,000 would still be due. (The difference between the balance of £34,617.96 and the sum of £24,617.96 he ordered Rock to pay into court reflected a payment on account of £10,000 made some time earlier.)
It is now accepted that the BIFA conditions were incorporated into the contract, but Rock has challenged both the correctness of judge's construction of clauses 21(A) and 27(B) and his finding that both clauses satisfied the requirement of reasonableness of the Unfair Contract Terms Act. It is convenient to deal first with clause 21(A).
Clause 21(A) contains a prohibition against set-off of a kind commonly found in commercial contracts. Its purpose is to ensure that amounts falling due in respect of goods or services are paid promptly, thereby ensuring that cash-flow, which has been described as "the life-blood of business", is not interrupted. The meaning of clause 21(A) is clear on its face: it does not prevent the customer from pursuing claims against the supplier, but it does prevent him from withholding payment in satisfaction of a claim or (if his claim is unjustified) from withholding payment until the merits have been determined. On the other hand, the clause does not prevent the customer from withholding payment on the grounds that the sum claimed has not fallen due at all.
Mr. Bompas Q.C. submitted that the judge was wrong to reject the argument that at least part of the sums covered by the invoices on which Röhlig sued had not fallen due, but as I understand him he did accept that argument, which was reflected in paragraph 3 of his order. The judge dealt with this aspect of the matter very cursorily. He said:
"The position of the Defendant is, first, to say that clause 21(A) is not applicable on its construction because it only operates when sums are "due". That argument fails because of Schenkers. The Court of Appeal and the trial judge, Mr. Geoffrey Brice Q.C., had regard to, among other authorities, the Stewart Gill case. The judge endorsed the view that the clause which did not cover transactions or debts not due but did cover other claims precisely like those in this case."
In Schenkers Ltd v Overland Shoes Ltd [1998] EWCA Civ 234, [1998] 1 Lloyd's Rep 498 this court considered clause 23(A) of the then current BIFA conditions, which was worded in exactly the same terms as the present clause 21(A). However, the debate in that case was confined to the question whether the clause satisfied the requirement of reasonableness and sheds no light on the question now under consideration. It is true that at first instance Mr. Geoffrey Brice Q.C. accepted the proposition that if there was a defence to an individual invoice the sum claimed was not "due", but that does not seem to me to take the matter any farther. Stewart Gill Ltd v Horatio Myer & Co Ltd [1992] QB 600 was another case in which the court had to decide whether a particular term prohibiting set-off satisfied the requirement of reasonableness. Again, it does not provide any assistance on the present point.
Röhlig's claim was to recover the sums shown in the various invoices attached to its particulars of claim, each of which identified the various services or disbursements in respect of which payment was claimed. Rock's case, as set out in the witness statement of its director, Mr. van Halewyn, was that Röhlig had overcharged it for ocean freight and had sought to recover charges for repositioning containers and handling charges at the port of loading which were for the account of Galaxy under the contract of sale. However, an analysis of the invoices shows that the disputed amounts come to no...
To continue reading
Request your trial
-
John Holt & Company (Liverpool) Ltd and Another v Caterpillar (NI) Ltd (Previously Called FG Wilson (Engineering) Ltd)
...Liverpool. I disagree. No set-off clauses are not unusual in standard terms and conditions. As Moore-Bick LJ observed in Rohlig (UK) Ltd v Rock Unique Ltd at [14]: "The judge could also have found from his own experience that clauses requiring payment of invoices without set-off are common ......
-
Phoenix Interior Design Ltd v Henley Homes Plc
...F.G. Wilson (Engineering) Ltd v John Holt & Co [2012] EWHC 2477 (Comm); [2012] 2 Lloyd's Rep 479 at [93]–[109] (“ Wilson”); RÖHLIG (UK) Ltd v Rock Unique Ltd [2011] EWCA Civ 18 at [8] and [16]; University of Wales v London College of Business Ltd [2015] EWHC 1280 (QB). These cases were ......
-
CIS General Insurance Ltd v IBM United Kingdom Ltd
...be construed as sufficiently clear to be effective (as in Coca-Cola Financial Corp v Finsat Ltd [1998] Q.B. 43; WRM v Wood and Rohlig (UK) Ltd v Rock Unique Ltd [2011] EWCA Civ. 18). But there is no principle of construction that a no set-off clause cannot be effective unless it is expres......
-
Schenker Ltd v Negocios Europa Ltd
...Meyer v Dresser [1864], which, in my view, may not have continuing relevance today, but also to the Court of Appeal decision in Rohlig (UK) Ltd v Rock Unique Ltd [2011] EWCA Civ 18, paragraph 8. The Court of Appeal were considering the BIFA terms but I accept the proposition that the court......
-
Court Of Appeal Upholds No Set-Off Clause And Time Bar Provision In BIFA Standard Trading Conditions
...(UK) Ltd v Rock Unique Ltd [2011] EWCA Civ 18 Time-bar provisions are commonly found in contracts for the carriage of goods by sea and road. The importance of complying with the one-year time-limit under Article III Rule 6 of the Hague-Visby Rules (HVR) is well-known to the shipping industr......
-
Commercial Disputes Update - Summer 2011
...if they mean that parties to a contract have a very tight time limit in which to bring a claim Rohlig (UK) Limited v Rock Unique Ltd [2011] EWCA Civ 18 The relationship between Rohlig and Rock Unique Ltd's was governed by the British International Freight Association standard trading condit......